ReSA - THE REVIEW SCHOOL OF ACCOUNTANCY

CPA Review Batch 45  May 2023 CPA Licensure Examination AT-20

AUDITING (Auditing Theory) J. IRENEO  E. ARAÑAS  F. TUGAS  C. ALLAUIGAN

CODE OF ETHICS FOR PROFESSIONAL ACCOUNTANTS

PURPOSE OF THE IESBA CODE
▪ The IESBA Code of Ethics for Professional Accountants (including International Independence
Standards) or “the Code” sets out fundamental principles of ethics for professional accountants,
reflecting the profession’s recognition of its public interest responsibility. These principles
establish the standard of behavior expected of a professional accountant. The fundamental
principles are: integrity, objectivity, professional competence and due care, confidentiality, and
professional behavior.
▪ The Code provides a conceptual framework that professional accountants are to apply in order
to identify, evaluate and address threats to compliance with the fundamental principles. The
Code sets out requirements and application material on various topics to help accountants
apply the conceptual framework to those topics.
▪ In the case of audits, reviews and other assurance engagements, the Code sets out
International Independence Standards, established by the application of the conceptual
framework to threats to independence in relation to these engagements.

KEY PARTS OF THE CODE

▪ Part 1 – Complying with the Code, Fundamental Principles and Conceptual Framework, which
includes the fundamental principles and the conceptual framework and is applicable to all
professional accountants.
▪ Part 2 – Professional Accountants in Business, which sets out additional material that applies
to professional accountants in business when performing professional activities. Professional
accountants in business include professional accountants employed, engaged or contracted in
an executive or non-executive capacity in, for example:
o Commerce, industry or service.
o The public sector.
o Education.
o The not-for-profit sector.
o Regulatory or professional bodies.
Part 2 is also applicable to individuals who are professional accountants in public practice when
performing professional activities pursuant to their relationship with the rm, whether as a
contractor, employee or owner.
▪ Part 3 – Professional Accountants in Public Practice, which sets out additional material that
applies to professional accountants in public practice when providing professional services.
▪ International Independence Standards, which sets out additional material that applies to
professional accountants in public practice when providing assurance services, as follows:
o Part 4A – Independence for Audit and Review Engagements, which applies when
performing audit or review engagements.
o Part 4B – Independence for Assurance Engagements Other than Audit and Review
Engagements, which applies when performing assurance engagements that are not
audit or review engagements.

USING THE CODE

▪ The Code requires professional accountants to comply with the fundamental principles of ethics.
The Code also requires them to apply the conceptual framework to identify, evaluate and
address threats to compliance with the fundamental principles. Applying the conceptual
framework requires having an inquiring mind, exercising professional judgment, and using the
reasonable and informed third party test.
▪ The conceptual framework recognizes that the existence of conditions, policies and procedures
established by the profession, legislation, regulation, the firm, or the employing organization
might impact the identification of threats (self-interest, self-review, advocacy, familiarity,
intimidation). Those conditions, policies and procedures might also be a relevant factor in the
professional accountant’s evaluation of whether a threat is at an acceptable level. When threats
are not at an acceptable level, the conceptual framework requires the accountant to address
those threats. Applying safeguards is one way that threats might be addressed. Safeguards are
actions individually or in combination that the accountant takes that effectively reduce threats
to an acceptable level.
▪ An acceptable level is a level at which a professional accountant using the reasonable and
informed third party test would likely conclude that the accountant complies with the
fundamental principles.

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CODE of ETHICS for PROFESSIONAL ACCOUNTANTS AT-20
1. Which of the following statements best describes why the profession of certified public accountants
has deemed it essential to promulgate a Code of Ethics and to establish a mechanism for enforcing
observation of the Code?
A. A pre-requisite to success is the establishment of an ethical code that primarily defines the
professional’s responsibility to clients and colleagues.
B. A distinguishing mark of a profession is its acceptance of responsibility to the public.
C. A requirement of most state laws calls for the profession to establish a code of ethics.
D. An essential means of self-protection for the profession is the establishment of flexible ethical
standards by the profession.
2. A profession is distinguished by all of the following characteristics, except
A. Mastery of a particular intellectual skill, acquired by training and education
B. Adherence by its members to a common code of values and conduct established by its
administrating body, including maintaining an outlook which is essentially objective
C. Acceptance of a duty to society as a whole (usually in return for restrictions in use of a title or
in the granting of a qualification)
D. Services are offered in exchange for monetary compensation
3. Close family include the following, except
A. Parent
B. Non-dependent child
C. Sibling
D. Spouse
4. Professional accountant, as defined in the Code of Ethics, means
A. An individual who holds a valid Certificate of Registration and current Professional Identification
Card issued by the Board of Accountancy and the Commission, whether he/she be in public
practice, industry or commerce, the public sector, or education.
B. An individual in public practice who is considering accepting an audit appointment or an
engagement to perform accounting, tax, consulting or similar professional services for a
prospective client (or in some cases, an existing client)
C. An individual accountant in public practice who most recently held an audit appointment or
carried out accounting, tax, consulting or similar professional services for a client, where there
is no existing accountant.
D. An individual in public practice currently holding an audit appointment or carrying out
accounting, tax, consulting or similar professional services for a client.
5. Which is/are contained in the Code of Ethics for Professional Accountants?
I. Rules
II. Principles
A. I only
B. II only
C. Both I and II with more provisions on the latter
D. Both I and II with more provisions on the former
6. Which best describes the parts of the Code of Ethics?
A. Three parts: Parts A, B, and C
B. Four parts: Parts A, B, C, and D
C. Three parts: Parts 1, 2, and 3
D. Four parts: Parts 1, 2, 3, and 4
7. Identify from which sections will the following information be in the Code:
I. Independence for Audits and Reviews
II. Independence for Other Assurance Engagements
A. Parts 3A and 3B, respectively
B. Parts 3B and 3A, respectively
C. Parts 4B and 4A, respectively
D. Parts 4A and 4B, respectively

8. S1 Parts 1 and 2 of the IESBA Code are applicable to CPAs in public practice.
S2 Parts 4A and 4B of the IESBA Code are applicable to CPAs in commerce and industry.
A. True, false
B. False, true
C. True, true
D. False, false

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9. Which of the following is/are required of by the Code?
I. Comply with the fundamental principles of ethics.
II. Apply conceptual framework in identifying, evaluating, and addressing threats
A. I only
B. II only
C. I and II
D. Neither I nor II
10. According to the IESBA Code, applying the conceptual framework requires exercising professional
judgment, remaining alert for new information and to changes in facts and circumstances, and
using the:
A. diligence of a good father of a family test.
B. independence test.
C. professional skepticism test.
D. reasonable and informed third party test.
11. In the few instances where the domestic laws are in conflict with the IESBA Code,
A. Both are applied simultaneously.
B. The IESBA Code requirement prevails.
C. The local law prevails.
D. There will be no ruling for that particular requirement.
12. The fundamental principle of integrity requires a CPA to
A. Be straightforward and honest in performing professional services.
B. Be fair and should not allow prejudice or bias, conflict of interest or influence of others to
override objectivity.
C. Perform professional services with due care, competence and diligence.
D. Act in a manner consistent with the good reputation of the profession and refrain from any
conduct which might bring discredit to the profession.
13. Which of the following is incorrect regarding confidentiality?
A. Professional accountants have an obligation to respect the confidentiality of information about
a client’s or employer’s affairs acquired in the course of professional services.
B. The duty of confidentiality ceases after the end of the relationship between the professional
accountant and the client or employer.
C. Confidentiality should always be observed by a professional accountant unless specific authority
has been given to disclose information or there is a legal or professional duty to disclose.
D. Confidentiality requires that a professional accountant acquiring information in the course of
performing professional services neither uses nor appear to use that information for personal
advantage or for the advantage of a third party.
14. S1 A CPA should maintain confidentiality even in a social environment.
S2 A CPA shall not disclose confidential information acquired as a result of professional and
business relationships outside the firm or employing organization without proper and specific
authority, unless there is a legal or professional duty or right to disclose.
A. True, false
B. False, true
C. True, true
D. False, false
15. A CPA should not be associated with reports, returns, communications or other information where
they believe that the information:
A. Contains a materially false or misleading statement.
B. Contains statements or information furnished recklessly.
C. Omits or obscures information required to be included where such omission or obscurity would
be misleading.
D. All of these.
16. The fundamental principle of Objectivity in the Code requires CPAs:
A. Not to compromise professional or business judgment because of bias, conflict of interest or
undue influence of others.
B. To independently distinguish between accounting practices that are acceptable and those that
are not.
C. Not to be unyielding in all matters dealing with auditing procedures.
D. To independently choose between alternate accounting principles and auditing standards.

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17. A CPA should maintain objectivity and free of conflicts of interest when performing:
A. Audits, but not any other professional services.
B. All attestation services, but not other professional services.
C. All attestation and tax services, but not other professional services.
D. All professional services.
18. Which of these statements describe attainment of professional competence?
A. Act diligently and in accordance with applicable technical and professional standards.
B. A continuing awareness and an understanding of relevant technical professional and business
developments.
C. The responsibility to act in accordance with the requirements of an assignment, carefully,
thoroughly and on a timely basis
D. Making clients, employers or other users of the professional services aware of limitations
inherent in the services to avoid the misinterpretation of an expression of opinion as an
assertion of fact
19. Competence as a CPA includes all of the following, except:
A. Having the technical qualifications to perform an engagement.
B. Possessing the ability to supervise and evaluate the quality of staff work.
C. Warranting the infallibility of the work performed.
D. Consulting others if additional technical information is needed.
20. The following steps are part of the conceptual framework approach to the Code of Ethics for
Professional Accountants. Set the steps in proper order.
I. Address the threats by eliminating or reducing them to an acceptable level.
II. Evaluate the significance of threats to compliance with fundamental principles.
III. Identify threats to compliance with the fundamental principles.
A. I, II, III
B. II, III, I
C. III, I, II
D. III, II, I
21. Which of the following best describes self-review threat?
A. May occur as a result of the financial or other interests of a professional accountant or of an
immediate or close family member will inappropriately influence a professional accountant’s
judgment or behavior.
B. May occur when a previous judgment needs to be re-evaluated by the professional accountant
responsible for that judgment.
C. May occur when a professional accountant promotes a position or opinion to the point that
subsequent objectivity may be compromised.
D. May occur when, because of a close relationship, a professional accountant becomes too
sympathetic to the interests of others.
E. May occur when a professional accountant may be deterred from acting objectively by threats,
actual or perceived.
22. This refers to the consideration by the professional accountant about whether the same conclusions
would likely be reached by another party
A. Reasonable and informed third party test
B. Liability adequacy test
C. Materiality level test
D. COVID-19 test
23. These are policies and procedures designed to eliminate or to reduce threats to fundamental
principles to an acceptable level.
A. Internal controls
B. Safeguards
C. Control activities
D. Segregation of duties
24. If a CPA cannot implement appropriate safeguards, the professional accountant should do the
following, except:
A. Decline the specific professional service involved.
B. Discontinue the specific professional service involved.
C. Resign from the client or the employing organization, as necessary.
D. Issue an adverse opinion on the subject matter of the engagement.

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25. Certain safeguards may increase the likelihood of identifying or deterring unethical behavior. Such
safeguards, which may be created by the accounting profession, legislation, regulation or an
employing organization, include, but are not restricted to:
I. Effective, well publicized complaints systems operated by the employing organization, the
profession or a regulator, which enable colleagues, employers and members of the public to
draw attention to unprofessional or unethical behavior.
II. An explicitly stated duty to report breaches of ethical requirements.
A. I only
B. II only
C. I and II
D. Neither I nor II
26. An inadvertent violation of the Code of Ethics, depending on the nature and significance of the
matter, may not compromise compliance with the fundamental principles provided, once the
violation is discovered,
A. The CPA withdraws from the specific professional service involved.
B. A disclaimer of opinion is issued to the client as a result of the violation.
C. The violation is corrected promptly and any necessary safeguards are applied.
D. The engagement is promptly transferred to another, non-violating professional accountant.
27. In ethical conflict resolution, if the matter remains unresolved, the CPA should
A. Consult with other appropriate persons within the firm or employing organization for help in
obtaining resolution.
B. Consider consulting with those charged with governance of the organization, such as the board
of directors or the audit committee.
C. Document the substance of the issue and details of any discussions held or decisions taken,
concerning that issue, as necessary.
D. All of the above.
28. When initiating either a formal or informal conflict resolution process, a CPA should consider the
following, either individually or together with others, as part of the resolution process:
I. Relevant facts
II. Ethical issues involved
III. Fundamental principles related to the matter in question
IV. Established internal procedures
V. Alternative courses of action
A. I, II, III, and V.
B. I, II, and V.
C. I, III, IV, and V.
D. I, II, III, IV, and V.
29. Which fundamental principle is explicitly mentioned to be safeguarded even as the CPA consults
with relevant professional bodies and legal advisors?
A. Technicality
B. Confidentiality
C. Integrity
D. Objectivity
30. Toni G., a happily single CPA, has exhausted all relevant possibilities in an ethical conflict which
she is trying to resolve. The conflict remains unresolved. Accordingly, the Code allows which of the
following steps to be taken by Toni G.?
I. Refuse to remain associated with the matter creating the conflict.
II. Withdraw from the engagement team or specific assignment.
III. Resign from the engagement.
IV. Resign from the firm or the employing organization.
A. I and II
B. II, III and IV
C. III and IV
D. I, II, III and IV

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31. After beginning an audit of a new client, Sydney, CPA, discovers that the professional competence
necessary for certain part of the engagement is lacking. Sydney informs management of the
situation and recommends another CPA, and management engages the other CPA. Under these
circumstances:
A. Sydney’s lack of competence should be considered to be a violation of generally accepted
auditing standards.
B. Sydney may request compensation from the client for any professional services rendered to it
in connection with the audit.
C. Sydney’s request for a commission from the other CPA is permitted because a more competent
audit can now be performed.
D. Sydney may be indebted to the other CPA since the other CPA can collect from the client only
the amount the client originally agreed to pay Sydney.
32. In which of the following types of clients would the Revised Code provide the strictest set of
requirements regarding independence?
A. A financial statement audit client.
B. A non-financial statement audit assurance client.
C. A non-assurance client.
D. A non-client.
33. Client issues that, if known, could threaten compliance with the fundamental principles include the
following, except:
A. Client involvement in illegal activities (such as money laundering)
B. Dishonesty
C. Questionable financial reporting practices
D. Conservative basis in determining accounting estimates
34. Appropriate safeguards during client acceptance may include:
A. Obtaining knowledge and understanding of the client
B. Obtaining knowledge and understanding about the client’s owners, managers and those
responsible for its governance and business activities
C. Securing the client’s commitment to improve corporate governance practices or internal
controls.
D. All of these.
35. S1 A CPA in public practice should agree to provide only those services that the CPA in public
practice is competent to perform.
S2 Acceptance decisions need not be periodically reviewed for recurring client engagements.
A. True, false
B. False, true
C. True, true
D. False, false
36. Regarding conflicts of interest, the following safeguards are applicable (select the exception):
A. Notifying the client of the firm’s business interest or activities that may represent a conflict of
interest, and obtaining their consent to act in such circumstances.
B. Notifying all known relevant parties that the CPA in public practice is acting for two or more
parties in respect of a matter where their respective interests are in conflict, and obtaining their
consent to so act.
C. Notifying the client that the CPA in public practice does not act exclusively for any one client in
the provision of proposed services and obtaining their consent to so act.
D. Clear guidelines for members of the client personnel on issues of security and confidentiality.
37. Which fundamental principle may be threatened when the CPA in public practice is asked to provide
a second opinion on the application of professional standards or principles to specific circumstances
or transactions by, or on behalf of a company or entity that is not an existing client?
A. Integrity
B. Confidentiality
C. Professional competence and due care
D. Professional behavior

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38. In which of the following situations would a CPA be in violation of the rules of professional ethics
in determining professional fees?
A. A fee based on appropriate rates per hour or per day for the time of each person engaged in
performing professional services.
B. A fee which is lower compared to the fee charged in the prior year for similar services.
C. A fee based on appropriate rates per hour, where the appropriate rate is based on the
fundamental premise that the organization and conduct of the CPA and the services provided
to clients are well planned, controlled and managed.
D. A fee that is based on 10% of the client’s adjusted net income for the current year.

39. Professional fees should be a fair reflection of the value of the professional services performed for
the client, taking into account:
A B C D
• The skill and knowledge required for the type of professional
Yes Yes Yes Yes
services involved
• The level of training and experience of the persons necessarily
Yes Yes Yes No
engaged in performing the professional services
• The time necessarily occupied by each person engaged in
Yes Yes No No
performing the professional services
• The degree of responsibility that performing those services entails Yes No No No

40. Contingent fees are widely used for certain types of non-assurance engagements. They may,
however, give rise to threats to compliance with the fundamental principles, especially the principle
of:
A. Objectivity
B. Confidentiality
C. Professional competence and due care
D. Professional behavior

41. The Code of Ethics would be violated if a CPA represents that specific consulting services will be
performed for a stated fee and it is apparent at the time of the representation that the
A. Actual fee would be substantially higher.
B. Actual fee would be substantially lower than the fees charged by other professional accountants
for comparable services.
C. Fee was a competitive bid.
D. CPA would not be independent.

42. A CPA in public practice should not pay or receive a referral fee or commission, unless the CPA in
public practice has established:
A. Internal controls designed to scientifically compute the referral fee or commission.
B. That explicit approval to pay or receive commissions has been obtained from the Securities and
Exchange Commission.
C. Safeguards to eliminate or reduce threats to fundamental principles to an acceptable level.
D. Another company as recipient, whose name does not include the name of the CPA in public
practice.

43. Evaluate the following cases with respect to the IESBA Code:
I – Dodong Jonas, CPA (DJ), is the auditor of MCCC Wholesale, Inc. DJ received a 10% commission
from Computer Systems, Inc. for hardware sold to MCCC Wholesale, Inc. The sale was made based
on DJ's recommendation to MCCC Wholesale that the company needed a new accounting
information system. DJ disclosed the commission to MCCC’s management. DJ also performs an
annual audit for MCCC.
II – Angkol, CPA, has a successful bookkeeping practice in Gensan. He is charging relatively low
service fees which resulted in having more clients. In addition, it is his practice to give gratefulness
gift for successful referrals.
A. Both Dodong and Angkol violated the Code.
B. Both Dodong and Angkol did not violate the Code.
C. Only Dodong violated the Code.
D. Only Angkol violated the Code.

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44. The payment or receipt of referral fees or commissions may create threats to which fundamental
principles?
I. Integrity
II. Objectivity
III. Professional competence and due care
IV. Professional behavior
A. I and III
B. I and IV
C. II, III, and IV
D. II and III

45. An inducement is an object, situation, or action that is used as a means to influence another
individual’s behavior, but not necessarily with the intent to improperly influence that individual’s
behavior. If a professional accountant accepts hospitality, the nature of which could be perceived
to be inappropriate were it to be publicly disclosed, which of the following is a correct combination
of threat to compliance with fundamental principle created by this situation?
A. Self-interest threat – professional competence and due care
B. Intimidation threat – professional behavior
C. Self-interest threat – objectivity
D. Advocacy threat – objectivity

46. Which statement is incorrect regarding custody of clients’ assets?

A. Client’s assets should not be held by the CPA if there is reason to believe that the assets were
obtained from, or are to be used for, illegal activities.
B. Custody of clients’ assets may create a self-interest threat to objectivity and professional
behavior.
C. No safeguards are applicable to reduce threats created by having custody of clients’ assets.
D. Fees due from a client may be drawn from client’s monies, subject to client approval.

47. The state of mind that permits the provision of an opinion without being affected by influences that
compromise professional judgment, allowing an individual to act with integrity, and exercise
objectivity and professional judgment.
A. Professional skepticism
B. Objectivity
C. Integrity
D. Independence of mind

48. The avoidance of facts and circumstances that are so significant a reasonable and informed third
party, having knowledge of all relevant information, including any safeguards applied, would
reasonably conclude a firm’s, or a member of the assurance team’s, integrity, objectivity or
professional skepticism had been compromised.
A. Principle of segregation
B. Functional integrity
C. Independence in appearance
D. Preemptive estoppels

49. A loan, or guarantee of a loan, from an assurance client that is a bank or a similar institution
member of the assurance team or to his immediate family, would not create a threat to
independence provided the loan or a guarantee is:
A. Immaterial to the member of the assurance team or his immediate family.
B. Immaterial to the assurance client.
C. Immaterial to both members.
D. Made under normal lending procedures, terms and requirements.

50. In reference to the code of ethics, in the FS audit of listed entities, the engagement partner, the
individual responsible for the engagement quality control review or any other key audit partner
should be rotated after serving in either capacity, or a combination thereof, for a pre-defined period
(i.e., “time-on” period), normally no more than:
A. 5 consecutive years.
B. 7 consecutive years.
C. 5 cumulative years.
D. 7 cumulative years.

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51. In an audit of a public interest entity (PIE), which of the following individual role can be held for a
period of more than seven cumulative years (the “time-on” period)?
A. Engagement partner
B. Engagement quality control reviewer
C. Other key audit partner
D. Engagement staff member
52. Certain entities may be of significant public interest because, as a result of their business, their
size or their corporate status they have a wide range of stakeholders. Examples of these entities
include (select the exception):
A. Non-listed companies
B. Insurance companies
C. Credit institutions
D. Pension funds
53. Using the same individual on an assurance engagement over a long period of time may create a
familiarity threat and self-interest threat. The significance of the threat will least likely depend
upon
A. The length of time that the individual has been a member of the assurance team.
B. The role of the individual on the assurance team.
C. The structure of the client.
D. The closeness of the individual’s personal relationship with senior management or those
charged with governance.
54. Evaluate the following services to be provided to a public entity:
I. Underwriting client share
II. Designing/implementing financial reporting IT systems
A. Both are not allowed without materiality considerations.
B. Both are not allowed if not material to the financial statements.
C. Only I is allowed if not material to the financial statements.
D. Only II is allowed if not material to the financial statements.
55. When associated with a larger structure of other firms and entities, a firm should:
A. Exercise professional judgment to determine whether a network is created by such as larger
structure.
B. Consider whether a reasonable and informed third party would be likely to conclude that the
other firms and entities in the larger structure are associated in such a way that a network
exists.
C. Apply such judgment consistently throughout such a larger structure.
D. All of the choices.
56. An engagement to issue a restricted use and distribution report is also referred to as
A. “Eligible audit engagement” c. “Legible audit engagement”
B. “Other audit engagement” d. “Acceptable audit engagement”
57. A professional accountant in business (PAIB) may be:
A. A salaried employee.
B. A partner, director (whether executive or non-executive) or an owner manager.
C. A volunteer or another working for one or more employing organization.
D. Any of these.
58. Evaluate the following statements related to PAIB:
I. They have the responsibility to further the legitimate business objectives of their organization.
II. The code would expressly hinder their responsibility in I even though their fundamental
principles are not compromised.
A. Both are true.
B. Both are false.
C. Only I is true.
D. Only II is true.
59. Evaluate the following possible threats related to PAIB:
I. PAIB participates an incentive compensation program offered by the organization.
II. PAIB accounts for a business combination after preparing the related feasibility study.
A. Both are self-review threats.
B. Both are self-interest threats.
C. Self-review, self-interest.
D. Self-interest, self-review.

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60. Evaluate the following issues related to PAIB:

I. PAIB serves in a governance capacity for two employing organizations in the same industry
and area of operation.
II. PAIB is a member of the committee that selects a vendor where an immediate family member
is a key management personnel in the vendor.
A. Only I poses as a source of conflict of interest.
B. Only II poses as a source of conflict of interest.
C. Both pose as sources of conflict of interest.
D. Neither I nor I poses as a source of conflict of interest.

61. Non-compliance with laws and regulations (NOCLAR) comprises acts of omission or commission,
intentional or unintentional, which are contrary to the prevailing laws or regulations committed by
the following parties, except:
A. The professional accountant’s employing organization.
B. Those charged with governance of the employing organization or of a client.
C. Management of a client.
D. Independent or external auditors.

62. Which of the following statements is true?

A. The professional accountant’ responsibility for non-compliance to laws and regulation (NOCLAR)
is different for public interest entities and other entities.
B. The best interest of the client is paramount when it comes to the professional accountant’s
responsibility for NOCLAR.
C. Bribery is one of the examples of events and related laws covered by the auditor’s responsibility
for NOCLAR.
D. NOCLAR only includes intentional acts of commission.

63. Which of the following are appropriate responses to a suspected NOCLAR?

I. Obtain an understanding of the NOCLAR
II. Discuss with appropriate level of management but not with those charged with governance
A. I only
B. Both I and II
C. II only
D. Neither I nor II

64. In discussing the non-compliance or suspected non-compliance with management and, where
appropriate, those charged with governance, the professional accountant shall advise them to take
appropriate and timely action to achieve the following, except:
A. Rectify, remediate or mitigate the consequences of the non-compliance.
B. Deter the commission of the non-compliance where it has not yet occurred.
C. Disclose the matter to an appropriate authority where required by law or regulation or were
considered necessary in the public interest.
D. Determine the account to be charged in order to conceal the non-compliance.

65. Which of the following are appropriate responses to a NOCLAR in the event that management has
not taken any corrective action?
I. Auditor may decide to disclose the matter to appropriate authorities
II. Auditor may also consider withdrawing from the engagement and client relationship
A. I only
B. Both I and II
C. II only
D. Neither I nor II

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